Amazon recently posted its longest streak of daily losses in almost 20 years after the company’s shares fell 18% over the last 10 days, erasing about $463 billion in market valuation. Shares on the e-commerce giant fell 0.4% on February 13, marking their ninth straight negative session, per a Bloomberg report. This marks Amazon stock’s longest losing streak since a nine-day decline that ended in July 2006. Amidst all this, an old letter by Amazon founder Jeff Bezos has appeared on X. Addressed to Amazon’s shareholders, the letter acknowledges Amazon’s 80% stock drop during the dot-com bubble in 2000. Shared by journalist Jon Erlichman, the letter emphasizes long-term customer obsession over market noise, with Bezos noting the company’s stronger fundamentals and highest-ever American Customer Satisfaction Index score of 84 for a service firm.
Here’s what Amazon founder Jeff Bezos told investors when shares fell 80% in 2000
To our shareholders: Ouch. It’s been a brutal year for many in the capital markets and certainly for Amazon.com shareholders. As of this writing, our shares are down more than 80% from when I wrote you last year. Nevertheless, by almost any measure, Amazon.com the company is in a stronger position now than at any time in its past.
- We served 20 million customers in 2(XX), up from 14 million in 1999.
- Sales grew to $2.76 billion in 2000 from 51.64 billion in 1999.
- Pro forma operating loss shrank to 6% of sales in Q4 2000, from 26% of sales in Q4 1999.
- Pro forma operating loss in the U.S. shrank to 2% of sales in Q4 2000, from 24% of sales in Q4 1999.
- Average spend per customer in 2000 was $134, up 19%.
- Gross profit grew to $656 million in 2000, from $291 million in 1999, up 125%.
- Almost 36% of Q4 2000 U.S. customers purchased from one of our “non-BMV” stores such as electronics, tools, and kitchen.
- International sales grew to $381 million in 20(X), from $168 million in 1999.
- We helped our partner Toysrus.com sell more than $125 million of toys and video games in Q4 2000.
- We ended 20(8) with cash and marketable securities of $1.1 billion, up from $706 million the end of 1999, thanks to our early 20(X) euroconvert financing.
- And, most importantly, our heads-down focus on the customer was reflected in a score of 84 on the American Customer Satisfaction Index. We are told this is the highest score ever recorded for a service company in any industry.
So, if the company is better positioned today than it was a year ago, why is the stock price so much lower than it was a year ago? As the famed investor Benjamin Graham said, “In the short term, the stock market is a voting machine; in the long term, it’s a weighing machine.” Clearly there was a lot of voting going on in the boom year of ’99—and much less weighing. We’re a company that wants to be weighed, and over time, we will be—over the long term, all companies are. In the meantime, we have our heads down working to build a heavier and heavier company.
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